2026 Supreme(Online)(Kar) 17809

THE HIGH COURT OF KARNATAKA
Vibhu Bakhru, CJ, C.M. Poonacha, J
State of Karnataka – Appellant
Versus
Guruswamy – Respondent
WRIT APPEAL NO. 541 OF 2026

Trade in intoxicating liquor is a state privilege, not a fundamental right. Consequently, the government has wide discretion to regulate licenses, impose reservation norms, and restrict renewals. No licensee holds a vested right to license renewal; applications are rightfully governed by the laws in force at the time of consideration.

Headnote:(A) Excise Act - Section 71 - Power of State Government to make rules - Rule making power is broad and enables regulation of persons/classes of persons to whom licenses are granted and terms/conditions upon which they are granted - Delegation to State Government to define reservation norms in e-auctions does not amount to excessive sub-delegation as the delegator and delegatee are the same entity. (Paras 32, 34, 41, 56)

(B) Licensing - Vested Rights vs. Privilege - Trade in intoxicants is a privilege exercisable by the State and not a fundamental right - There is no vested right to the renewal of a license in perpetuity; renewal is subject to the rules/law prevailing at the time of consideration - Policy decisions regarding issuance or non-renewal of licenses are valid. (Paras 47, 48, 59, 64.4, 65)

(C) Constitutional Law - Article 14 - Reasonable Classification - State holds exclusive privilege in liquor trade and can create varied terms and conditions for different license categories - Lack of uniformity in license terms does not per se constitute arbitrary discrimination. (Paras 66, 67)

(D) Judicial Review - Presumption of Constitutionality - Delegated legislation is presumed valid unless clearly ultra vires - Courts should defer to legislative wisdom in economic and policy matters unless manifest arbitrariness is proven. (Paras 68, 72, 73)

Facts of the case:
The State challenged an ad interim order staying the operation of new rules amending the excise licensing framework. The lower court stay was based on the contention that the amendments introduced reservation-based eligibility and automatic forfeiture of lapsed licenses, which were argued to be beyond the scope of enabling legislation. The petitioners (original respondents) held various liquor licenses and argued that the new rules infringed on their vested rights of renewal and were discriminatory.

Findings of Court:
The Court found that the excise rules were within the rule-making power conferred by the primary statute. The amendments were valid as they regulated the grant of privileges which vest exclusively in the State. The Court rejected the argument that a vested right to renewal exists for such trade, emphasizing that applications must be considered under the law existing at the time of consideration.

Issues: Whether the amendments were ultra vires the enabling statute due to excessive delegation, whether license holders have a vested right of renewal, and whether the classification of license categories violated the equal protection clause.

Ratio Decidendi: Trade in intoxicating liquor is an exclusive State privilege, not a fundamental right, and thus the State can impose conditions on its grant or renewal. The rules were within the scope of the statutory power granted, and no vested right is created by the possession of a previous license. As the delegated rule-making authority remains with the government, no excessive sub-delegation exists. Legislation and subordinate legislation are entitled to a presumption of constitutionality that requires high thresholds for interference.

Result: Appeal allowed; impugned interim order set aside.